Some time ago, I invited an attorney to give a presentation to my clients on asset protection. The whole point of asset protection is helping somebody defend themselves against a frivolous lawsuit or otherwise protect the wealth they’ve accumulated. It’s important, and it’s one of the specialties that our financial planning firm does. We spend a lot of time helping clients have the right insurance and other protections so they’re not devastated financially by big claims or other setbacks.
But I was blown away by one thing this asset protection attorney said: The number-one destroyer of wealth in the United States is a divorce. I thought, wow, I have really missed helping clients protect against that. When you consider that around 50% of marriages end in divorce, and that it’s not uncommon for a divorce to reduce someone’s net worth by half, that’s a much more common risk to financial security than a frivolous lawsuit. And it’s likely to be most devastating when it’s a “gray divorce” involving an older couple who have been married for 10 or more years.
Let’s look at an example. Suppose a couple has a net worth of $2 million, which will produce a $60,000 a year income basically for the rest of their lives. If they divorced, it’s reasonable that a judge would split that 50/50. If each walked away with a million dollars, that would give them $30,000 a year of income.
The problem is when a couple splits, their income might drop by half but their expenses are going to go up. They now have two homes, two sets of utility bills, two mortgages or rent payments, twice the maintenance. Also, a lot of people don’t realize that when you become a single, your income taxes are going to go up. Without getting too far into the math, let’s just say that if overall expenses would increase by 50%, each spouse is probably going to have to reduce their lifestyle by 22% to 35%.
Imagine you have a partner and you jointly make $100,000 a year. Think about what your lifestyle would be like if you cut that by $22,000 to $35,000. You’d now be living on $65,000 to $78,000.
That is the bottom-line dollar cost of a divorce. The reason a gray divorce is so devastating is this: If you get divorced in your 20s or 30s, chances are you’re still in the early years of earning. You have time to recover, time to rebuild and accumulate wealth. If you’re in your 60’s or 70’s, you don’t have that time.
What can we do to help prevent a gray divorce?
There can be a lot of benefit in doing financial therapy. Obviously, money is only one of the reasons that people get divorced, but money conflict is a factor in many divorces. So often it can be about spending habits, conflicting goals, and competing needs. For older couples, the conflicts might focus on retirement lifestyles—maybe one partner wants to travel the world and the other wants to live close to grandkids. Estate planning is another area where couples can really get stuck.
Regardless of the exact nature of the money disagreements, it is a huge positive investment to do some type of couples therapy when there are problems. And the best time of, course, to engage a couples therapist is when the problems are starting to creep up. Unfortunately, that’s rarely the time when couples seek out help. Usually it’s got to be a screaming crisis before we’ll engage any type of therapeutic help.
If you’re a financial planner working with couples, or maybe the adult child of a couple struggling with money issues, you might be able to encourage them to seek out help before the crisis hits. Maybe they’ll start the process a few months or even years earlier, when things can still be negotiated and resolved.
It’s not cheap to engage a financial therapist—my guess is that the going hourly rate is probably between $200 and $500. One of the first issues to try to resolve may be fears and money scripts over “We can’t afford this.” It may be that you can’t afford not to do it. It’s likely to be way cheaper than a divorce.
If you and your spouse are looking for a financial therapist, it’s good to check out whether the therapist has a specialty or training in working with couples. Not every therapist will work with couples, and this is true of financial therapists as well.
In working with a couple, there are a lot of interests in the room. You have the couple, so the therapist is working with two people instead of one. Then you’ve got the coupleship, which is kind of a third party in the room. If you’re in a relationship, often there are parts of you that show up differently when you’re alone than when you’re with somebody else. The whole dynamic at play between the partners, as well as the dynamics between the therapist and the partners, means extra work for the therapist and requires specific training.
A training that I have been doing is called IFIO—Intimacy From the Inside Out. It’s specific training for Internal Family Systems (IFS) practitioners and therapists around how to work with a couple with the modality of internal family systems. If you’re looking for a couples therapist and you are intrigued by the IFS model, you can find out more about that at https://ifs-institute.com/.
Once you find a couples therapist/financial therapist, I would also say don’t expect miracles right away. This is a process. It often takes years for a couple to get to the point where money conflicts are so disturbing that they’re open to getting help. It’s not going to be sorted out in one or two sessions. Going into an engagement like this, it’s helpful to start to look at yourself. To turn your focus inward and to ask yourself, “What’s going on inside of me when my spouse says this? When my spouse does that and I react, what’s happening inside of me? What emotions am I feeling?”
There’s going to be a lot more success in the therapy with starting to look at what is happening inside of you and look at whatever behavior you are contributing to this dance. Most couples have a dance. It’s a pattern that goes back and forth, and it doesn’t really matter what the content is. It matters about the process.
And as you begin to drill down, no matter what the dance involves—yelling, shutting down, manipulating, whatever—it’s really important to try and determine two things: “What do I hope?” and “What are my fears?”
- What do you hope this process is going to do for you?
- What behaviors and patterns do you hope to change?
- What positive changes in the relationship do you hope for?
- And what are you afraid this process might do?
- If those behaviors and patterns don’t change, what are your fears?
- If the behaviors and patterns do change, what are your fears?
If each partner can get to this place of drilling down to get to their hopes and fears around the relationship, oftentimes you’re going to find that both partners want the same thing. They’re wanting the same outcome. It might be connectedness. It might be health in retirement. It might be doing the things that they enjoy together. It usually takes a lot of introspection and internal focusing to get to that part, and to begin to talk about more about what’s going on inside of each partner and why.
Eventually, this therapeutic exploration of the history behind all of your behaviors around money and in the coupleship can help you realize two things: One, that your money conflicts as a couple are not about the money. Two, that every behavior, no matter how illogical it seems to ourselves or other people, makes perfect sense when we understand the underlying beliefs and emotions behind it.
Underlying couples’ money conflicts are each partner’s money scripts and beliefs around money, which are often shaped by early experiences, wounding, and trauma. So a “fight about money” is often one partner’s wounded parts battling with the other partner’s wounded parts. Understanding this dynamic can help us become more present, more of an objective observer of our own actions and beliefs as well as those of our partner. That place of understanding is where healing and reconciliation can begin.
Check out The Financial Therapy Podcast by Rick Kahler
